What is the difference between margin and markup?

Both describe the same profit, measured against different bases. Margin divides profit by the selling price; markup divides it by the cost. A 40% margin is a 66.7% markup — quoting one when you meant the other is a common and expensive mistake.

What margin should I aim for?

It depends entirely on the trade. Grocery retail runs on single-digit margins, software on 80% or more. Compare against your own sector, not a general rule.

Is gross margin the same as profit?

No. Gross margin only subtracts the direct cost of the goods. Rent, wages, marketing and tax come out afterwards, so a healthy gross margin can still leave no net profit.

Money

Margin Calculator

Enter what an item costs you and what you sell it for.

The formula

profit = price − cost

margin % = profit ÷ price × 100

markup % = profit ÷ cost × 100

Worked example

An item costing $60, sold at $100

100 − 60 = 40 profit
40 ÷ 100 = 40% margin
40 ÷ 60 = 66.7% markup

Where this goes wrong

Confusing margin with markup

Margin is profit as a share of the selling price; markup is profit as a share of the cost. Buy at $60 and sell at $100 and that is a 40% margin but a 67% markup — the same trade, two very different numbers. Pricing off the wrong one is how businesses quietly undercharge.

Questions

What is the difference between margin and markup?: Both describe the same profit, measured against different bases. Margin divides profit by the selling price; markup divides it by the cost. A 40% margin is a 66.7% markup — quoting one when you meant the other is a common and expensive mistake.
What margin should I aim for?: It depends entirely on the trade. Grocery retail runs on single-digit margins, software on 80% or more. Compare against your own sector, not a general rule.
Is gross margin the same as profit?: No. Gross margin only subtracts the direct cost of the goods. Rent, wages, marketing and tax come out afterwards, so a healthy gross margin can still leave no net profit.